The Bureau of Economic Analysis released the PCE price index and it didn’t move in the right direction this past month over month.
The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent (table 5). Real DPI decreased 0.1 percent in September and real PCE increased 0.4 percent; goods increased 0.5 percent and services increased 0.3 percent (table 3 and table 4).
source: BEA.gov
In, “Comparing Inflation 1960 to 2023” we demonstrated how inflation is following an eerily similar path as it did in the late 70s and wonder if it will happen again?
What would drive this growth of inflation if it does happen? For starters, we have millions of people leaving the labor force each year to retirement, disability or excess wealth. We don’t have enough young skilled people to back fill all the retirements so demand for goods and services will continue to rise while labor participation will continue to decline. In the late 1970s several wave of baby boomers entered family formation age, we now have the same thing with millenials and Gen Z. In the late 1970s there was an oil embargo and conflict in the Middle East. Today we have oil disruption with Russia, Iran and possible others in the Middle East.
The next FOMC meeting is next week so we’ll be interested to see the Fed’s view on all of this and what their future expectations might hold. Stay tuned, stay profitable and stay solvent…